Sacred ground WTO ruling energizes Brazilians

EDITOR'S NOTE: This week, journalist Jose Sergio Osse in Brazil sheds light on Brazil's WTO complaint against U.S. cotton subsidies. While there are internal struggles within Brazil's government over how hard to push for the international abolishment of subsidies, the driving force behind the effort is strong. Brazil's farmers are convinced that subsidized countries produce too many commodities and that international prices suffer because of it.

Brazilian farmers are asking for more action from their international negotiators in the WTO (World Trade Organization). The outcome of complaints against U.S. cotton and sugar programs have energized the country.

The WTO has become almost sacred ground for Brazilians, where they believe they can win a commercial fight against stronger competitors, such as the EU and the United States. More than that, they believe that the WTO decision set a standard for other countries within the Group of Twenty (G-20) for international commerce for agricultural products. Not surprisingly, the G-20 is led by Brazil and India.

Even so, Brazilians farmers feel this is not enough and there is still room for additional gains. “It's not worth it to close small deals,” says Gilman Viana Rodrigues, vice-chairman for international affairs of CNA (National Agriculture Confederation — the largest farmers union in Brazil). “We'd rather insist on what we believe is right.”

Essentially the country believes in the worldwide abolishment of subsidies and commercial barriers. In addition, the CNA representative endorses the pressure brought against many ministries in Brazil, including those of agriculture and foreign affairs.

Brazil's strategy is to lay the groundwork for winning negotiations in the scheduled meetings of the sixth WTO ministerial round in December in Hong Kong. The meetings will end the Doha Round and open renewed battlefronts in international commerce, especially in agriculture.

Brazilian producers want their negotiators to bring attention to what they contend are prejudicial American and European subsidies, trade barriers and the negative consequences of both on international markets, especially in developing countries.

Brazil will focus its attention on world domestic policies that allow countries to subsidize agriculture to the point of creating exportable surpluses at artificial prices that don't match production costs.

“With these practices, countries that are naturally fit for agriculture and do not count on subsidies, such as Brazil, are the ones that are prejudiced the most,” says Rodrigues.

The deadline for the United States to comply with the WTO ruling came on Sept. 21, six months after its formal adoption. The next day, Brazilian officials sent a request to the WTO to retaliate against the United States for not complying.

Brazil's foreign affairs minister, Celso Amorim, said that Americans appeared willing to negotiate. “We had good discussions, but they were unspecific and because of that, we made the decision to ask for our right to retaliate.

“I can't connect the cotton case to Doha Round negotiations. This is the law and can't be traded for other concessions,” he told news agencies in Paris, where he met White House commerce official Rob Portman.

Brazilian farmers strongly believe that the removal of subsidies is the key to their profitability. “Our producers live constantly riding the world prices roller coaster while Americans only enjoy the top of it,” says Marcos Jank, a Brazilian analyst who has worked at IDB (Inter-American Development Bank) and who presides over ICONE, an international trade studies organization.

“They get only the high and average prices, never the low ones, thanks to the many price and income guarantees and safety nets provided by their government. They are less encouraged to gain productivity than our own farmers.”

Brazilan farmers believe that subsidies hurt American farmers, too. “Brazil is becoming more and more competitive in agriculture exactly due the fact it has no subsidies,” he adds.

Brazilian farmers are struggling to convince their government that agriculture is the No. 1 industry in Brazil, and, as such, must be given sharper attention during the WTO meetings. Internally the problem is that other national industries, such as steel and mining, also claim that role.

Farmers point out that agribusiness is responsible for as much as 40 percent of Brazilian GNP and roughly the same amount of its exports. Because government studies show that the country loses about $7 billion a year due to protectionism and subsidy policies from international competitors, they are sure they have the edge against their national contenders for the diplomatic spotlight. In addition, the current presidency is the most agriculture-sensitive ever to govern Brazil.

Jose Sergio Osse is a Brazilian agricultural journalist and owns a public relations firm in Sao Paulo. He has worked as a press advisor for Syngenta, Brazil, and as an agricultural reporter for the country's major newspaper.